Groupon for Consumers and Marketers
Groupon is a company that provides daily deals on various products, events, and services in the form of an electronic coupon. Consumers sign up for a free account on the Groupon website (www.groupon.com) or using the mobile app. Businesses can offer coupons through Groupon's marketing program to reach the Groupon members. Estimates on the internet say that over 44 million people in the United States have purchased at least one Groupon deal.
For consumers
People purchase Groupon deals through Groupon, so it's a pre-payment for a service or activity at the discounted price. For a product, the deal includes the purchase of the item, and when you buy an item, you'll supply shipping information.
After signing up for an account, you become a Groupon member. After logging in with your email address and password, you can browse and receive offers of discounted services from businesses in your local area and see a range of products since products can ship from anywhere. These coupons are for services and products at discounted prices and save money while promoting businesses located near the member. Every day Groupon sends each member an email describing a Daily Deal from a business in their area. You have the option to opt-out of these emails, and just browse Groupon when you want to find a deal.
The Daily Deal can save a member up to 90% percent of the original cost of the service or product. Daily Deals can be ignored or deleted, and there will be a new deal in your inbox the next day. In addition to the Daily Deals, deals are available by browsing the website or the mobile app. Groupon's app has the additional feature of using your smartphone's location to show a list of deals near you.
Deals exist for all kinds of products and services and can be searched by the type of item you're looking for or by categories. Some popular categories include things to do, beauty and spas, food and drink, electronics, travel, health and fitness and automotive. I've used Groupon personally for a cooking lesson, a kayak rental, and a salsa lesson. Sometimes the Groupon deals are an inspiration to try something new and different and at a discount!
For a consumer, Groupon is a good way to try out a new activity, product or service at a discount. However, to protect the business offering the deal, Groupon deals have an expiration date, and if you don't use your deal before it expires, your deal is gone. Deals can be limited in number, which helps place a cap on the number of transactions a merchant has to offer and also creates a sense of urgency to buy a favorite deal that is reaching its limit.
While the deals and saving money are appealing, be a smart consumer and read the fine print in any deal. Some deals are no better than offers that you can obtain directly from a business and some deals may have restrictions on what days you can use them.
How Groupon makes money
Groupon makes money by acting as a middleman and taking a percentage of the deal from the seller. Each time a Groupon member accepts a Daily Deal or spends money, Groupon charges the merchant for each deal sold. Depending on the type of business and the competition to be listed on Groupon, the marketing fee varies, but it's generally about 50% of the price of the deal.
This system is designed to benefit the customer, the promoted business, and Groupon. Let's use an example where the customer gets half off, Groupon earns fifty percent of the coupon's cost, and the company providing the discount receives exposure. For example, if a business regularly sells a service for $100, the customer will pay $50. Half of that ($25) goes to Groupon, leaving the business with $25. For a marketer offering a service that typically sells for $100 and only receiving $25 can impact profits, so why would a business use Groupon?
Why a business would use Groupon
While the advertiser may not make much or any profit from any one customer purchasing a deal, they potentially gain a new client. If the shopping or service experience is positive, new customers can turn into repeat customers or people who purchase additional items at higher profit margins. The deal itself may not be a money-maker for the business, but the exposure and potential for new business can be beneficial. Groupon has tools that restrict a member from purchasing multiple deals from the same merchant, so for a deal that's designed to get new customers in the door, it's difficult for a member to make the same purchase a second time. Just like coupons can have a limited use, Groupon has this feature available to merchants.
One of the advantages of coupon offers to attract new customers, get them to try a product or service they might not know about, impress them and keep them coming back for more. Groupon will work with almost any merchant to help them set up a deal and explain the various fees and costs. New features Groupon has introduced include the web for a deal buyer to book an appointment
Groupon requires that a specific number of people accept the discount, and if the quota is not met the coupon becomes void. This policy ensures that businesses receive many new customers each day. Anyone who purchased a deal that didn't make it's minimum receives a refund.
Marketers should be careful about how to use Groupon to make sure they can fulfill the number of offers made, and they can handle the scheduling of potential customers. It's also important to make sure that the pricing isn't so small that the benefit of new clients makes up for the total cost of a Groupon offer.
To my way of thinking
Groupon utilizes the internet to revolutionize the traditional coupon and is still widely used by marketers and consumers. By negotiating significant discounts with companies and mass emailing members, Groupon has updated discount shopping for the modern age.
Groupon is beneficial for people who are always on the lookout for a discount since they no longer have to spend hours clipping coupons out of a newspaper with a pair of scissors.
Not a subscriber? Don't miss a single issue: